Russian Parliament Ratifies Debt Deal With Armenia

The lower house of the Russian parliament ratified on Wednesday a far-reaching agreement to settle Armenia's $100 million debt to Russia, removing the last formal obstacle to its entry into force.

The State Duma rubber-stamped the so-called equities-for-debt agreement, signed last November, after a one-month delay which Russian officials attributed to unspecified "technical problems." The delay prompted speculation in Yerevan that the Russians may be having second thoughts about the wisdom of the deal which will expand their control of Armenia's cash-strapped energy sector.

Under its terms, Moscow will take over Armenia's largest thermal power plant and four other state-run enterprises in exchange for writing off its $100 million debt incurred since the 1991 Soviet collapse. Russian companies were already the exclusive suppliers of Armenia's main energy resources: natural gas and nuclear fuel.

The Armenian energy sector's dependence on Russia will deepen further as a result of another swap arrangement planned by the two governments. It is expected that Russia's RAO Unified Energy Systems (UES) power utility will gain the financial management of the Metsamor nuclear plant and become the owner of six Armenian hydro-electric plants in return for repaying Metsamor's $32 million debt to nuclear fuel suppliers.

UES will also provide an additional $8 million for a fresh fuel shipment which is urgently needed for the reactivation of the plant's only functioning reactor. It was halted for refueling in early April.

The deal was finalized by the two sides last March, but has still not be signed. A team of Russian energy officials arrived in Yerevan late last month to hammer out its final details. The Armenian Energy Ministry said at the time that the talks will end by May 6. However, no official announcements have since been made. Prime Minister Andranik Markarian said only this week that "the fuel issue will be solved by the end of this month."

Energy Ministry officials could not be reached for comment on Wednesday.